Archive for the ‘human capital’ Tag

Human Resources Professionals are faced with the challenge to streamline headcount, improve hiring outcomes and enhance performance management practices in this “do more with less” economy. Developing best practices to ensure that the right people are in the right places doing the right things will ultimately help organizations maximize their Human Capital investment.

A main concept that will maximize Human Capital is a close alignment of the hiring, training, and evaluation practices with company mission, vision and values. These elements make up the “moral compass” of an organization. Just like any relationship, if you are closely aligned with a person’s morals, values and overall outlook on life – you are likely to form a strong bond. We spend a lot of time and energy picking our friends and companions in life. We typically date a few different people before we commit to long-term relationships or marriages. Why would we treat an employment relationship differently? After all, we spend a whole lot of our time in that relationship!

HR Professionals can partner with business leaders to define a clear picture of what the mission, vision and values actually mean and the types of individuals and behaviors that truly personify those elements. Then, by adopting tools and activities in the hiring, training and retention initiatives they can help drive this streamlining and “Top Grading” effort in their organization. Here are a few ideas on how to make this work:

Competencies – Identify behaviors and attitudes of individuals that are core to the organization’s mission, vision and values in addition to those that are required for job-specific success. Define what those are, why they are important and what they look like in the form of actions and results. These can then be developed into training objectives, evaluation metrics and interview questions.

Assessment – Select assessments that are aligned with required skills (such as in-box exercises or technical tests) as well as personality and preference-based assessments to test core competencies. Identify some internal, ideal benchmarks for these and consider an activity or scenario exercise to determine how individuals will behave under similar circumstances.

Interview Process – Insert multiple stages into your interview process and involve multiple viewpoints. For a cultural fit perspective, involve direct team members with whom this individual will be working and encourage them to provide a realistic job profile including how decisions get made and communicated, what career growth looks like, management style and team expectations.

Performance Evaluations – Performance expectations and metrics that are aligned with company mission, vision, values will drive the behavior of progression and growth within your workforce. Incorporating specific developmental goals that relate to learning and applying concepts of your business models, codes of conduct, business acumen and organizational development will enable focus on the cultivation of professionalism and success.

According to a Harvard Business Review survey, which analyzed the responses of 1,379 global business leaders, 70% of the respondents predicted a “double” recession will transpire in the following months. Additionally in a similar survey conducted by World Bank, indicated a decrease in global growth to 2.8% in 2011 from 3.8% last year (Harvard Business Review). These statistics indicate the recession is far from over. As the economy struggles to get back on its “feet” and the potential for a second recession grows more promising, it becomes even more important to manage human capital with a compensation strategy that is cost-sensitive as well as motivating. With the addition of performance-based initiatives incorporated into the compensation strategy, employers can foster an environment for learning, innovation, creativity, problem-solving and empowerment, while managing compensation budgets and ensuring resources are allocated accurately.

Pay for Performance links an employee’s reward to their performance and the performance of the company. This type of compensation structure allows the employee to be an individual as while a collective contributor to the company’s bottom line by aligning their goals to match the organization’s goals. A key component in executing performance based-pay is implementing the “right” periodic performance review. Performance reviews or performance appraisals should reflect an employee’s true performance, instead of a subjective interruption of what managers think performance should be based on their own evaluation approach. The employee performance reviews must invoke both internal and external equity for it to be adopted by the employee.

Primary Components of an Effective Performance–Pay System

Conduct a job analysis

Evaluate the worth of the job based on an absolute basis and relative basis of the job compared to others in the organization; assign a labor grade to the job based on the position

Implement a rating system that supports calibration (adjusting the performance measurement to match a known standard), to eliminate a flat distribution of ratings. A wider rating scale results in a fairer and more accurate distribution.

Implement performance appraisal periodically, at least quarterly, to give an accurate assessment of the employee’s progress. Use the performance appraisal to document the employee performance throughout the year.

Provide feedback to employees on a constant basis (not only through the performance appraisal).This helps to motivate the employee and pinpoint problem areas.

Engage employees in two-way communication about their performance through an Open Door policy. This communication style decreases the likelihood of rumors or complaints about information being withheld and enables the employee to trust the manager and vice versa which leads to increased commitment and performance.

Implement an employee self-appraisal assessment to the process. The employee self-appraisal assessment can be completed prior to the performance appraisal meeting to gage the employee’s perspective on their performance in comparison to management’s point of view.

Creating and presenting performance goals is a critical step in the performance appraisal process. Goals should be set in way that reinforces the employee’s ability to plan, implement, and achieve the goals.

In today’s economy, many organizations seek cost effective solutions to perform business functions. The lure of reducing overhead costs and leveraging specialized human capital and technological resources has many organizations considering outsourcing. A critical question then becomes- when is it the right time to outsource business functions?

Simply put, outsourcing is when an organization contracts out a business function(s) to an external expert involving an exchange of services and payment. For example, many companies outsource a chunk of their HR and/or IT functions to an outside agency, while some only outsource a particular sector such as payroll or training. Some companies may find it practical to outsource specific projects such as company restructuring.

When considering outsourcing for any reason, organizations should assess their goals and needs to determine if outsourcing is a viable option. Consider these steps when planning to outsource any business functions:

Review the mission and vision statements of the organization; determine the short-term and long-term objectives of the sector/project that is being evaluated for outsourcing;

Determine the tasks needed to realize these objectives;

Examine how outsourcing will help achieve these objectives;

Evaluate current in-house resources to determine if the organization has the workforce competency and technology to meet these objectives; and

Perform a cost benefit analysis to study the economics of an outsourcing venture.

So when is the right time to outsource business functions?

An organization may implement outsourcing when:

It wants to reduce administrative duties so that members of the current workforce can focus on more instrumental business roles;

It wants to reduce costs and control capital expenditures such as office equipment and software; or

It wants an industry expert to assist in fulfilling specialized needs.

Successful outsourcing is dependent on defining measurable metrics that evaluates both parties involvement within the agreed upon services. Hence, organizations should translate vital business objectives into specific and quantifiable goals. Business leaders should have a clear vision of what outsourcing should achieve, along with aligned operating models to support it. Furthermore, it is vital to develop a comprehensive communication strategy for stakeholders to provide updates on outsourcing objectives and manage expectations. Appropriate training on new roles and processes is also necessary during the outsourcing transition.

The next step in the process is selecting the right business partner! Outsourcing is a long-term relationship and finding the right partner is critical to everyone involved. The investment in selecting the right partnership can save alot of time and effort that can be devoted to profitable endeavors. Conduct a search and/or utilize Federal and State associations, outsourcing suppliers, online contractor services etc.

Gain the knowledge you need to make the best decision by requesting a written proposal and an official presentation, and considering the following factors:

The business partner’s knowledge of the industry vertical, financial stability, reputation, infrastructure, and back-up systems; and

The business partner’s corporate culture, values and goals; for example, check to see whether the vendor shares the company’s business values and standards.

When a business partner is selected, the company should consider the extent of the relationship and if a need for a written contract that defines any, some or all of the following considerations: the project timeline, pricing policies, business continuity plans, quality standards, and other responsibilities.